I received an $800.00 settlement from a Class Action Lawsuit against FCA (FIAT Chrysler) for transmission problems with a vehicle I own. To be clear, the vehicle was purchased with after-tax money, is a personally owned vehicle, and not used for business. In reviewing Publication 4345, which deals with settlements, I am led to believe that this settlement is non-taxable on the basis of the fact that it was essentially to compensate for a loss of value of the vehicle (the property-loss exemption). The vehicle was originally about $40,000 and this settlement is $800.00 which obviously does not represent an income on my part. Am I accurate in my assessment that it is non-taxable? I did receive a 1099-MISC and entering it seems to have Turbo Tax try to list it as taxable income because the various exceptions are not present. I want to see what others think because this is obviously a confusing situation. In a certain sense, you might call this a "rebate" on what I originally paid with after-tax money and therefore would almost about to double-taxing the money.
Please forgive me if this question is redundant, I asked it on the Turbo Tax Community but can't find it so I am not sure it posted.
